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1. If the dollar-euro exchange rate, E($/euro), on 30 June 2016 is $0.50 per euro, then the euro-dollar exchange rate, E(euro/$), on the same date
1. If the dollar-euro exchange rate, E($/euro), on 30 June 2016 is $0.50 per euro, then the euro-dollar exchange rate, E(euro/$), on the same date would be:
a.1.25
b.2.00
c.0.50
d.0.80
2. Suppose $1 = 10.5 pesos in New York and $1 = 9.6 pesos in Mexico City. Because of arbitrageurs, the exchange rate of E(peso/$) in New York will go ____ and, the rate in Mexico City will go _____.
a.up; down.
b.up; up.
c.down; up.
d.down; up.
3. Use the following figure to answer the question.
Exchange rate ($ per () SE 1.40- T 1.20-IT 1.00 - -- T DE 100 200 300 Euros (millions)Step by Step Solution
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